Retail tenants receive rent relief
• Landlords will offer discounts to qualifying firms
The commercial property industry has unveiled a R2bn-plus package to assist tenants during SA’s lockdown. To qualify for the benefits, retail tenants will need to undertake not to retrench staff during the relief period. The relief package comes after some national tenants including TFG, Pepkor and KFC owner Yum! Brands told their landlords they had definitive legal opinions, which meant they would not need to pay rent for April, and in some cases beyond this, because of the national lockdown.
The commercial property industry has unveiled a R2bnplus package to assist tenants through SA’s lockdown.
To qualify for the relief benefits, retail tenants will need to undertake not to retrench staff during the period.
The relief package comes after some national tenants, including TFG, Pepkor and KFC owner Yum! Brands, told their landlords they had definitive legal opinions that meant they would not need to pay rent for April, and in some cases beyond this, because of the lockdown.
The property industry group, which includes a collective of three major representative bodies for real estate in the country, says its relief package will provide industry-wide and nationwide assistance for those retail tenants hardest hit by complying with the government-imposed halt in commercial activity.
The three major bodies forming part of the group are the SA Real Estate Investment Trust Association (SA Reit), the SA Property Owners Association and the SA Council of Shopping Centres.
The commercial property sector makes a significant contribution to SA’s society, economy, tax revenue and employment. It is responsible for more than 300,000 jobs directly, as well as indirectly in other sectors including cleaning, hygiene, security and technical services, plus building and construction.
The package assumes that the lockdown does not extend beyond 21 days.
“If this isn’t the case, it is critical for stimulus packages such as those provided by the government, banking sector and solidarity fund to kick in to weather this storm,” said Estienne de Klerk, spokesperson for the collective and SA Reit chair.
De Klerk is the CEO of Growthpoint Properties, SA’s largest private landlord.
For April and May this year, retail landlords will offer relief in the form of rental discounts, where rent will be waived partially or completely. They will also offer interest-free rental deferments where the deferred rental will be recovered over the six to nine months from July 1 2020 onwards.
Rental relief includes basic rent, operating costs and parking rental, but excludes all rates and taxes and utility costs, as well as insurance.
The initiative will focus principally on supporting affected small, medium and micro enterprises, but can also provide help to other retail tenants, De Klerk said. The relief is defined through a table with different offers for different kinds of retailers. Each landlord could use their discretion in the relief and assistance they provide, but the property industry package stipulates the minimum qualifying retailers can expect.
“All tenants whose accounts were in good standing (as) at February 29 2020 can be assured that there will not be any evictions for the next two months,” De Klerk said.
Head of listed property funds at Stanlib, Keillen Ndlovu, said the package was reasonable as the property industry had “offered a middle ground”. There was effectively a 50% cut in overall rent, including operating costs and parking.
Izak Petersen, the CEO of listed Reit Dipula Income Fund, applauded the moves.
“The property industry is approaching the matter in good faith, cognisant of the challenges all parties face. We have gone as far as availing our assets for free utilisation for testing,” he said.